Does inflation affect home prices?
There is a true link between any good with a limited supply and inflation. This means that when there are fewer properties available prices will be more expensive than if there were a multitude of properties available.
Of course, there are several factors that will affect home prices, such as demand. One of the biggest factors that will increase demand is interest rates. When interest rates are low and home buying can be considered more affordable, the demand for available properties increases. However, if the supply of homes of constant but demand stay the same, prices of homes will increase.
Prospective home buyers in larger cities feel this effect more strongly, as there is usually less available properties.
Is home ownership good during inflation?
There are many benefits to owning a home during a volatile economy. Buying a home and locking in your financing can help stabilize what is probably your largest expense, housing. If you’re able to get a fixed rate for your mortgage, your housing expenses will be consistent for up to 15-30 years!
Even when housing prices and mortgage rates increase, buying a home can set you up for long-term stability and success-. Even if you buy today you’ll be protected from increasing costs in the future. During times of inflation, it’s imperative that you invest money into assets that will appreciate in value, rather than losing value over time. Most experts project that mortgage rates will continue to increase throughout 2022, so locking in rates as soon as possible has never been more important.
Inflation and real estate 2022
Experts are projecting that mortgage rates and prices will continue to rise throughout the end of 2022, so there’s never been a more opportune time to lock in your rate and find your dream home. Keep in mind that demand and bidding wars may increase as other home buyers attempt to get ahead of price increases.
Blog content from Investopedia, Keeping Current Matters & Market Watch
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